Banks urged to keep interest rates low

The Bankers Association of the Philippines (BAP) on Monday told the country’s largest financial institutions to keep their lending rates as low as possible to help keep the economy running amid the coronavirus pandemic.

In a statement, BAP president Cezar Consing said the impact of the global public health emergency was becoming more apparent on the economy as the Philippines enters the third week of the Luzon-wide enhanced community quarantine (ECQ).

“Thus, in this ECQ period, we ask our member banks to do their utmost to maintain reasonable lending rates, with the objective of trying to keep such rates as close as possible to pre-ECQ levels,” said Consing, who is also the president of Bank of the Philippine Islands, the country’s fourth largest lender.

The head of the BAP—the umbrella organization of the country’s largest banks with 42 member-financial institutions —noted that banks ”have taken extraordinary steps to continue to serve banking customers” since the lockdown began.

Alongside this, the Bangko Sentral ng Pilipinas also reduced both the policy rate and reserve requirements of financial institutions and took steps to ease the regulatory burden borne by banks.

The BSP has opened rediscounting facilities, which can be tapped by banks for its liquidity needs, and has urged these banks, in turn, to extend leniency to their borrowers who may have difficulty settling their loan obligations over the near term.

The national government has also passed the Bayanihan Act, which gives the executive branch extraordinary powers to address the current crisis.

In his letter, Consing said BAP members must maintain a level of branch presence that allows for the execution of transactions that cannot be performed digitally as well as keep their online banking facilities open.

Banks should also ensure availability of cash in their open branches and the majority of their ATMs, he added.

Finally, Consing urged banks to “contribute to stable and liquid financial markets” by helping cash circulate in the economy and serving the needs of their clients.

“Our country needs our very best efforts in these difficult times,” he said. INQ